Correlation Between Hanjin Transportation and Daiyang Metal
Can any of the company-specific risk be diversified away by investing in both Hanjin Transportation and Daiyang Metal at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Hanjin Transportation and Daiyang Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanjin Transportation Co and Daiyang Metal Co, you can compare the effects of market volatilities on Hanjin Transportation and Daiyang Metal and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Hanjin Transportation with a short position of Daiyang Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjin Transportation and Daiyang Metal.
Diversification Opportunities for Hanjin Transportation and Daiyang Metal
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanjin and Daiyang is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Hanjin Transportation Co and Daiyang Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daiyang Metal and Hanjin Transportation is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Hanjin Transportation Co are associated (or correlated) with Daiyang Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daiyang Metal has no effect on the direction of Hanjin Transportation i.e., Hanjin Transportation and Daiyang Metal go up and down completely randomly.
Pair Corralation between Hanjin Transportation and Daiyang Metal
Assuming the 90 days trading horizon Hanjin Transportation Co is expected to generate 0.43 times more return on investment than Daiyang Metal. However, Hanjin Transportation Co is 2.34 times less risky than Daiyang Metal. It trades about 0.01 of its potential returns per unit of risk. Daiyang Metal Co is currently generating about -0.2 per unit of risk. If you would invest 1,900,000 in Hanjin Transportation Co on August 31, 2024 and sell it today you would earn a total of 0.00 from holding Hanjin Transportation Co or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanjin Transportation Co vs. Daiyang Metal Co
Performance |
| Timeline |
| Hanjin Transportation |
| Daiyang Metal |
Hanjin Transportation and Daiyang Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanjin Transportation and Daiyang Metal
The main advantage of trading using opposite Hanjin Transportation and Daiyang Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjin Transportation position performs unexpectedly, Daiyang Metal can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Daiyang Metal will offset losses from the drop in Daiyang Metal's long position.| Hanjin Transportation vs. Hanwha InvestmentSecurities Co | Hanjin Transportation vs. LB Investment | Hanjin Transportation vs. DSC Investment | Hanjin Transportation vs. Coloray International Investment |
| Daiyang Metal vs. LG Household Healthcare | Daiyang Metal vs. Daejung Chemicals Metals | Daiyang Metal vs. LG Chemicals | Daiyang Metal vs. SK Chemicals Co |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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